Blockchain-Enabled Platforms: Challenges and Recommendations

Abstract

Not even a tenth of blockchain-enabled platforms survive their first anniversary. The volatility of cryptomarkets has brought negative attention and led some to question the applicability of blockchain technology. This paper argues that the challenges for startups and incumbents behind these platforms are numerous, and that the speculative bubble around cryptocurrencies is only one of them. Blockchain still needs to demonstrate fully its disruptive potential and so far, entrepreneurs have not managed to significantly impact incumbents’ market shares. This transitory period requires incumbents to let go of traditional control mechanisms, and startups to scale down their global decentralised hopes. Indeed, whilst the technology can indeed scale fast, starting in a controlled market and managing growth is a counterintuitive but essential strategy for blockchain-enabled platforms to implement. Given the diverging nature of the technology, at present at least, the combined shortage of skills in blockchain and security, and the trust blockchain is built on, rushing to the global market is high risk. Nonetheless, given the potential returns, the risk appetite is high and both entrepreneurs and corporate executives share unrealistic expectations about a technology they cannot fully understand since it has not yet converged. In light of the above, this article identifies the main challenges faced when building blockchainenabled platforms and provides recommendations for startups and incumbents to overcome these. In order to reach these conclusions, the information obtained from twenty semi-structured interviews with leading actors in the field has been fundamental.